PSILoc have released Space Doubler v.1.00. It compresses installed applications, email attachements and files created by Java applications. There is also a option to compress/decompress all applications.

From author's pages:

Space Doubler is an AUTOMATIZED compression system for Nokia
7650/3650. This means that your applications can be decompressed
automatically when you attempt to run them. You don't need to unpack
them manually prior to running them! And when you exit your
application it will be automatically compressed again!

After installing Space Doubler, run it to select applications to be
compressed. Ater the operation you will be presented with compression
ratio.

Now you can simply start your compressed application! You will see a
message that the application is being decompressed and after a short
while it will be started. When you finish working with it and close it
IT WILL BE AUTOMATICALLY COMPRESSED AGAIN!

Space Doubler is THE BEST compression program ever created for Series
60 platform. It not only allows saving N7650's limited storage memory,
but also takes full control over the compression/decompression
process, making it almost invisible for the user. Working with
compressed files and applications DOESN'T REQUIRE ANY ADDITIONAL
operation. All you have to do is to start your program and close it -
exactly as usual.